White Pass & Yukon Route Railroad is rejecting a plan that would have seen its trains haul ore from Carcross to Skagway.
Eagle Industrial Metals had hoped to partner with the railway in order to transfer iron-rich magnetite from the old Whitehorse Copper mine to tidewater.
The mining company wants to move nearly 2 million tonnes of ore over the next five to seven years. Trucks would have taken the ore to Carcross, where it would have been loaded onto train cars and taken to Skagway.
But White Pass, which until recently seemed warm to the idea, has decided not to proceed with the project. “The business case for the magnetite rail haul has not been met,” railroad president Eugene Hretzay told Skagway Mayor Stan Selmer in a letter earlier this month.
It’s a disappointment to the Yukon Chamber of Commerce, which touted the project as a way of saving money, reducing highway traffic and curbing greenhouse gases. The project was also promoted for holding the potential of having the railroad run to Whitehorse eventually.
Skagway also held hopes that a revived industrial railway could bring more business to town. “The value to the community to transport by rail is far greater than transporting by truck,” said Selmer.
He, along with Eagle Industrial Metals President Chuck Eaton, both say they’re “disappointed” by the news.
Hretzay couldn’t be reached for comment. But, according to Selmer, getting into the ore-hauling business didn’t make sense to White Pass’s parent company, ClubLink Enterprises Limited, which is largely invested in golf courses.
“They’re a tourism company,” he said. “It didn’t pencil for them to become a freight-hauling railroad, since all that they were interested in, because of the return that they get now, is being a tourism service.”
The railroad’s decision comes a month after a Yukon Chamber of Commerce meeting where Hretzay and Eaton pitched the idea.
This deal had been talked about for months, said Selmer, who was invited to attend the meeting.
During the summer, White Pass is the largest employer in the borough. An agreement to use the railroad to haul ore would extend the railroad’s season and create approximately 12 new jobs, he said.
Both Hretzay and Eaton said the project would need government assistance, said Selmer. Skagway wanted to partner with Alaska Industrial Development and Export Authority to help fund the project. During these talks, Selmer contacted Hretzay to confirm the company’s interest.
“We were prepared to take these steps,” he said.
But when he contacted the railroad, he learned they were no longer interested.
“It appeared to be a reasonable thing to bank on – literally,” said Selmer. “We could go to the bank with this idea and get some assistance if we decided we couldn’t fund it ourselves. But this was the version of a mine’s bankable feasibility study, this was our version of a bankable feasibility study to come up with a way to make this work, and I think we could have,” he said.
While this project would have only lasted for five to seven years, it could have led to more mining companies using freight to transport their ore, said Selmer. Mining companies Alexco Resources and Capstone Mining Corp. currently haul ore to Skagway by road.
The municipality has already stated it doesn’t want more than 650,000 tonnes travelling down the highway. They’re now at about 400,000 tonnes, toward reaching that limit, he said.
Despite the setback, Skagway’s relationship with mining in the Yukon is still promising, said Selmer.
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